British Firm Sells Plaza Hotel for $675 Million

LONDON – British firm Millennium & Copthorne (search) sold out of New York's Plaza Hotel (search) in a $675 million deal on Friday, bidding farewell to a fabled Fifth Avenue address which was nevertheless running up losses.

The 97-year-old hotel has hosted some of the world's biggest stars, including Hollywood celebrities Michael Douglas (search) and Catherine Zeta-Jones (search) who held a wedding reception there.

However, the Plaza's returns were not good enough for Millennium & Copthorne (M&C), which has a policy of selling assets it considers as non-core.

The Plaza ran up a pre-tax loss of $0.9 million for the year ending December 2003, hurt by its high cost base and a slowdown in business linked to the weakening of the U.S. economy.

M&C was not the full owner but held a 50 percent stake in Plaza Operating Partners, which is selling it on to U.S. property firm El Ad Properties NY LLC (search). The other 50 percent of Plaza Operating Partners is owned by Saudi Prince Alwaleed bin Talal (search).

M&C, which is 52.6 percent owned by Singapore-based property firm City Developments Ltd., said it would use the proceeds to help cut debt.

Shares in M&C were up 2.2 percent at 311-3/4 pence by 1120 GMT, among the biggest gainers in the FTSE 250 mid-cap sector.

Seymour Pierce analyst Paul Leyland kept a "sell" rating on M&C, arguing that the company was currently overvalued, but added that the disposal was a sensible move.

"They're redressing their balance sheet without giving away much cash-flow," he said.

The Plaza, which occupies a French Renaissance building near Central Park, has a history of glamour.

"Nothing unimportant ever happens at the Plaza," is a popular saying associated with the hotel, whose former owners include tycoon Donald Trump (search).

Movies shot at the hotel include Hitchcock classic "North by Northwest" as well as "The Great Gatsby" and "Crocodile Dundee."